Kohl's 2010 Annual Report Download - page 29

Table of Contents
On November 17, 2010, we entered into an accelerated share repurchase transaction with Morgan Stanley & Co. Incorporated (“Morgan Stanley”) to
repurchase $1.0 billion of Kohl’s common stock on an accelerated basis. This accelerated share repurchase was part of the $2.5 billion share repurchase
program authorized by our Board of Directors in September 2007. On November 18, 2010, we paid $1.0 billion to Morgan Stanley from cash on hand. We
received a total of 18.8 million shares under the program: 12.6 million shares on November 18, 2010, 3.8 million shares on December 7, 2010, 1.5 million on
January 11, 2011, and a final delivery of 0.9 million shares on March 3, 2011. The total number of shares received was generally determined by the
discounted average of the daily volume weighted average price of shares traded during the relevant pricing periods.
We have $300 million of long-term debt which was due in March 2011 and $100 million of long-term debt which is due in October 2011. We expect to
replace this debt in the second half of 2011. In anticipation of the debt refinancing, we entered into an interest rate swap in December 2010 to hedge our
exposure to interest rate risk on the first $200 million of debt issued. Amounts related to this financial instrument were not material. We also expect to refinance
our $900 million senior unsecured revolving facility which will expire in October 2011.
In February 2011, our Board of Directors approved our first ever dividend. The 25 cent per share quarterly dividend will be paid on March 30, 2011 to
all shareholders of record as of March 9, 2011. The dividend reflects the Board’s confidence in our long-term cash flow. We expect to use a portion of future
free cash flow to continue to pay quarterly dividends. Our Board of Directors also increased the remaining share repurchase authorization under our existing
share repurchase program by $2.6 billion, from $900 million to $3.5 billion. We expect to execute the share repurchase program primarily in open market
transactions, subject to market conditions and to complete the program by the end of Fiscal 2013.
Our credit ratings have been unchanged since September 2007 when we issued $1 billion in debt. Our ratings are currently as follows:
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
 
Long-term debt Baa1 BBB+ BBB+
We may from time to time seek to retire or purchase our outstanding debt through open market cash purchases, privately negotiated transactions or
otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The
amounts involved could be material.
Our financing activities provided cash of $30 million in 2009 and used cash of $273 million in 2008. The change is primarily due to treasury stock
purchases in the first six months of 2008.
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Key financial ratios that provide certain measures of our liquidity are as follows:
  
Working capital (In Millions)  $3,095 $ 1,884
Current ratio  2.29:1 2.02:1
Debt/capitalization  20.8% 23.5%
Ratio of earnings to fixed charges  4.4 4.5
Return on gross investment*  17.6% 16.9%
*Return on gross investment is a non-GAAP financial measure.
The decrease in working capital and the current ratio as of year-end 2010 compared to year-end 2009 was primarily due to the reclassification of $400
million of debt maturing in 2011 from long-term to short-term and the $1.0 billion purchase of Kohl’s common stock pursuant to the accelerated stock
repurchase program. The
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